The business strategy of Ba Ria - Vung Tau seafood processing and import export Joint Stock Company in the period 2011-2020

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MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT

THE BUSINESS STRATEGY OF BA RIA-VUNG TAU SEAFOOD PROCESSING AND IMPORT

EXPORT JOINT STOCK COMPANY IN THE PERIOD 2011 - 2020

CLASS: GAMBA01.C0609 MEMBERS OF GROUP: 02

1 NGO VIET HOAI

2 MAI HÀ THANH HÙNG 3 CHUNG TRAN QUOC HUY 4 HO THI BICH NGOC

5 DOAN CONG ANH THU’ 6 NGUYEN CHUC VU

HO CHI MINH CITY 2011

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( RIGGS) Strategic Management

ACKNOWLEDGEMENTS

After nearly two years studying and researching, with the enthusiasm of the teachers and classmates, with the goal of collecting the fullest knowledge, our group have collected useful knowledge for working in a firm

We sincerely thank to teachers for their whole-hearted in teaching, thank to the leaders of the Ba Ria-Vung Tau Seafood processing import-export joint stock company (Baseafood) for facilitating us to complete our minor thesis

We wish the teachers and the leaders of the Baseafood be healthy, efficient in working, and your career and the company grow strongly

The group’s representative

NGO VIET HOAI

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¬

TABLE OF CONTENTS

ACKNOWLEDGEMENTS ovecssscsssscsssnesssessvensossvsonessnvsanraneesneesnecnnsonnesonsssonnnasesnsstsn I

TABLE OF CONTENTS sesrnsccssonremncoxsenoemcsnnncenarinmmrecesanranssesernirentastsieans toto 2

EN TROD CTO ossvesnsoxassanvessesssansnsxsnceannvnrnconccnovencennecssnsenmenneconsenncnnytennnne iq ihconas04 6

CHAPTER 1 ARGUMENT BASIS AND PRACTICE STRATEGIC DETERMINATION BY ENTERPRISE IN PROCESSING AND

BUSINESS OF FISHERIES :sscsssccsssssssssessnccensecssscensesscessnceseesnsseonss 7 1.1 DEFINITION, PROCESS OF PLANNING AND EXECUTING THE

STRATEGIC csccocvessenserscscereconnsnneenrnnnsisssdinegiitspeses sussueiusnanieasasnesinuusennsananecessens 7

1.1.1 DefmOfisoeeeeseeeseseriiseeeresevaesee cereassssrr caan38 ua 850 886 6 G4561 S5 KIH1081 7 1.1.2 Planning process and strategy implementation 7 1.1.3 Some matrixes are often used in making strategies '” 8 1.1.3.1 The external ƒactor evaluation EFE máf{rIX -sằs- 8

1.1.3.2 The internal factor evaluation IFE maffiX -<ee«- 8

1.3.3.3 The compeiitive profile matrix GIENM .oainaenunassersueesseee 8 Fd Bohs” - SWOT Tbr dX ervavaenconsnnnnonmerniintstis nomi nih BUSAShSN EROS SNA SIUSEAI SAS HBISMINS UN 8

1.2 THE MODEL OF FIVE COMPETITIVE FORCES BY MICHEAL

0899):403): ốc 9

1.2.1 The power of the suppller 1s presented by the following points 10 1.22 The threat of substitute representeil DY c-cveeeeeieesereeerisenansereersnnserien 10

Í 3-3 PmiệniFl[:etififffEtTOHlo sae aceon ce anowsnosswamaes samen gi nenrourene 007301 ceoeemennbieateangrersrmuase 10 1.2.4 The power of customers is presented Dy . sccceneerirerrrrrrrrre II 1.2.5 The intensity ofcompetitive rivalry 1s presented by - II

13 QSPM MATRIX AND STRATEGY CHOICT - 5«<- 11 1.4 BUSINESS, PROCESSING - IMPORT AND OF VIETNAM SEAFOOD DURING INTEGRATION AND GLUOBALIZATION . - 13

1.4.1 Fisheries contribute to GDP, foreign currency source/ competitiveness and

advantages OF Vietinary wenesinsneoens nqnisens ikbnnsih Sian 83 76031E54703 07590E5EE8 13 1.4.2 | Some issues need to solve in Vietnam's ÍIsherles s€CtOr - 14 1.4.2.1 Deal with dumping lawsutt c.ccccccesee cere eeeeeeeeneeeen eens eeteneesanenes 14

1.4.2.2 Deal with the technical ĐqFFi@FS . - SĂĂĂSSeSsSs seeseeeeeee 15 1.4.2.3 Deal with use of chemical treatments and preserVvafIVes 16

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1.5 NECESSITY OF STRATEGY PLANNING FOR BA RIA —-VUNG TAU SEAFOOD PROCESSING AND IMPORT EXPORT JOINT STOCK COMPANY (BASEAFOOD) c0s.cscosessescevessssensnstnenoonsecennessuvessenseoenssnseese 16 CHAPTER 2 CURRENT SITUATION ON STRATEGY MANAGEMENT 18 2.1 OVERVIEW OF BA RIA —VUNG TAU SEAFOOD PROCESSING -

EXPORT AND IMPORT JSC .ccccssssesseesscesssscnsscnsseseessesnseessneeseesesenees 18 2.1.1 Formation and development of Ba Ria— Vung Tau Seafood processing-

eXporf and IâpOFf COIDAfIV .- c2 323v ve rrree 18 2.1.2 Role and position of Company in the fisheries sector of Ba Ria — Vung Tau

w ` 19

2.1.3 Overview of financial situation of Company in 2007 — 2010 20 DASA, HHSÙNGSS PEDOTI ả ả.ằeỸ-ĂĂseeseernrss.rmekseeersinsea s3 5s4.02482M83 20 2.1.3.2 Balance she@l àSĂ ST nhe 22 2.1.3.3 Solvency n8.) n 28

5.1.3.3 Pimanclal lcvertiie PưG .« c aaais.cssnEi DL000/S1A 1853.5884 28

213.5, - HXeCHIÍOH @[]JGCHWểfiesš PHHƠ c« ceagisc.s8nsg.0ố0 2306 28

P8 BN nan 5T 29

2.2 CURRENT SITUATION OF PRODUCTION AND BUSINESS BY COMPANY IN PERIOD 2008 — 2010 cvscssscsesesrssccnsnesssepacusesvnsseonenssonnsenees 29

22.1 Analyze key export markets oÊCouHiĐPRHHY‹ss.eeseeseecseeeeeonasaoenrsee 29 dinh l0, casa VAT AIS » ccnenoass smmenasone wemenaies ammeter nerarrttumwoutnne bauetrregtoeese 30 Didi, EURGpear MAPECT ANG VSS sanamannssmannunnasenogrrsvnieaoratsertnndrtussesgtorvs 31

ĐÈ MU“ (ẽ Lo na n 32

2.2.2 Company’s key export producfS anaÌy sen 33 2.2.3 Company key production product anaÌySIS s-cccssssssseirrerre 34 2.2.4 Analysis of Input material mark€t 55s + vvsvesseerereerees 35

2.2.5 Analysis of Company”s human r€SOUTCC +5-<++<+c+s++ess+2 36

2.2.6 _ TFE Internal factor evaluation matrix of the company . 37

2.3 ANALYSE THE INFLUENCE OF EXTERNAL FACTORS ON

ACTIVITIES OF BASEAFOOD COMPANY csssscsecssessenseensscenneeees 38

2.3.1 6U c ốc nan 6 38 2.3.1.1 — ECOHOHHC ÍACÍOI .ĂĂ SGK khe 38 2.3.1.2 Goverment and law ÍQCÍOF - s55 + vs ssrvtrrikererree 38

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2 Strategic Management

0 NN - 5s bib Behe BESS Se TSR 39 D326, DGTP AT ƒHGTBFN <<.«esseeseesvEES.en saaDBBSini S24 h6 STLEWGHW EÙ/VHLNGIPDRHNNUEIGE 39 DRIES, TCG JO CUIF sn ansiss namin Snes ie ENE ORRNRLTK EES HER SCART HE 39 0.3.1.0 Tn6ffRẰMul.DGHIGN, .« eeesu aehiaatiaenDbshisgileGeS2S.ISAIDHLĐSAPSNG9N098% 40 LAI ÄNriy for evirnidil (GiOFSE DỊ HT Ã ea.eaananasnarnnnaesn maaznausnssbnnH 40 2.3.2 — BSWRRIISÏZGl BHVÍTORBYĐEHÍ, .úe ớn sanh bà gan nh tnnnavatrostiseoraresr 4I

2.4 SWOT ANALYSIS OF BASEAFOOD cceĂeSSSenneesseesnessesaessens 44

ZA, — SUPSEGNS nennenennnnnannsithanenanalih anoilittthenift bits isn 5S INNES ERS RESORTED CNRS 44 "VINH sẽ SESAEENTA SSO Sa RARER eae REAUORRY 44 DAS _ OOPS ener nnn ns Sencha hid AN TARE NPRM RHO 45 en So ee ee 45

2.5 ANALYSIS OF FIVE COMPETITIVE IMPACTS BY BASEAFOOD 46

2sô.1 — HWUWRGE EEOTTISƯUHEF m.srsannussesdhnzerDta sen RRENERG aon RULE NRE es eR 46

25.2 | iopaet thom inporier (See sector 2.2.0) nes sencommmemecnsecenss on mummmnemeres 47 cờ; ` GHWHDGBssiesssnaaneimsanonnnyiuosnrtrttradptaUfatorattgEISIESEKDSNGIOIRESEUHSESHRERESPSSE 47

2.5.4 AlternatIVe prOdUCS uc SH kh ket 49 2.5.5 Potential COImiDKIẨOFS cẶS St ngàng kh kiệt 49

CHEAP TERR 2Ã soceeeeeoroernorEbherborenttisnoetkbinHlnokSo0gTDRSESKEGEKSYISEUEAEISUNSSĐSE0mSSSVESroygtilirsrneyetvumnsl 54 RECOMMENDING BUSINESS STRA TEGY EFOR -« ess-eeseesse 54 BA RIA- VUNG TAU SEAFOOD PROCESSTING -Ăcesseeesseese 54 AND IMPORT EXPORT JOINT STOCK COMPANY -e<.eeeseeeeee 54 THE PERIOD OE 2011 1-2/(02/( - <5 < sen nen 1g2g.050800820707.0850" 54 3.1 DEVELOPMENT ORIENTATION OF BA RIA — VUNG TAU

EISHERRY (20TU-202ÙJ Ÿ tassesginccesnssasisecsasiaatmacatannanrammacennaneonss 54 3.1.1 Onentation of Vietnam fishery Development ee 54

3.1.2 Development objective of Ba Ria — Vung Tau fisherles 56

3.1.3 Development Strategy of BASEAFOOD 2011-2020 58

3.1.3.1 The core value oƒBasedƒood .-<<<<<<<<<=ss 58 3.1.3.2 Mission and Vision to 2()2) ĂcSS<<+Sx+seeeseees 58 3.1.3.3 Baseafood’s production and business target by 2020 59

3.2 QSPM AND THE COMPANY STRATEGY CHOICE OF BASEAFOOD tiiiii8u-00100535.700010580/01953400180<I0611010E4855010E-7NBIESSMNAEKSGEROGESXSSGMIEISISSI0ĐSE/S40010801-0/IG.V.GESA.MTLKARSEESEE 60

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3.2.1 QSPM Matrix group SO (Strengths — Qpportunifies) 60 3.2.2 QSPM Matrix group W-O (Weakness — OpportunitIe$) 62

3.2.3 QSPM Matrix group WT (Weakness — Threats) - + ccc- s2 63

3.2.4 QSPM Matrnix group ST (Strength — ThreatS) - co ằcc ào 65

3.3 PROPOSAL FOR THE IMPLEMENTATION OF STRATEGY 66

3.3.1 Solution 1 (S-O of QSPM): The strategy to embrace present market;

increase export volumes and quantity to such market by restructuring the

company to better meet the market’s requirement but not necessary to Igrl: FOr SW THEEIEksesessseteeeosotuissiisrnitrogifoogEV02925007051991209021090G07-/0005000/-78704870g7e 67

3.3.2 Solution 2 (W-T of QSPM): Strategy of production specialization in the

8011701910100) 7 o 69

3.3.3 Solution 3: (S-T of QSPM): Building new factories to develop production scale and prepare to remove factories in planned or polluted zones such as Enterprise 2, Enterprise 3,, Enterprise 52 . 2.- naiins onnsanmnaaiaian vexsenenes 69

3.3.4 Solution 4: (W-T of QSPM): Strategy to enhance training and educating

RSMAS A ssc ans re sas Se sername ea Re mas mee 69 3.3.5 Strategy ofraw material procurement enhancemeni . 70

3.4 MEASURES FOR THE IMPLEMENTATION OF THE STRATEGY 71 se Ree, PGE TREN SO, ecctear em seen apteie uc tee se sadness enema neo: 71 3.4.2 For Vietnam Association of Seafood Exporters and Producers (VASEP)

and for Ba Ria- Vung TâaU 2Q Q3 ng nành re 71

3.4.3 For the Government and Ba Ria-Vung Tau People’s Committee 72 CONCLUUSTIONN co so HH 01009306368866656646800660600800606690089060080806 74 1 RESULTS THROUGH EXERCISIE - 5S SS nen enseersesee 74 2 SHORTCOMINGS OF EXCERSIES cs-ceerrrerrrrrrrrreerre 74 3 EXTENSIVE STUD,„ eecxeecŸễeeseeeeeroersesEreseessaLEaeslE1865áusà86166558858500605006555 74 HNHEE,RENCES -eieeeSSieeeee-eres22512-<.4s84xa<6s85160152.5006569464856506075E035855610851056 75 APPENDICES

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INTRODUCTION

Vietnam is increasingly integrating into the world economy by joining

ASEAN, ASEAN Free Trade Area (AFTA), signing bilateral trade agreement between Vietnam and US and becomes a member of the World Trade Organization (WTO) A rapid integration trend into the World economy is essential, not ony creating opportunities for development of Vietnam Enterprises but also is a big

challenge because it will be easy to face with many difficulties or bankruptcy if Viet

Nam does not have reasonable business strategies or take advantage of its strength Fishery is one of key economic sectors of Vietnam, bringing big foreign currency due to growing continuosly export activities over past years Each year, export turnover of Vietnam is up to US 4.5 billion

With its strength in development of marine economy in general and export- processing sector in particular, Ba Ria-Vung Tau (a coastal province) always considers marine economy to be the key economic in development strategy In

which, fishery export and processing is identified as one of the three major economic sectors

Ba Ria - Vung Tau Seafood processing and Import Export Joint Stock

Company (Baseafood) is considered as the leading company of province in the processing of fishery, thanks to great advantages such as its early establishment,

modern facilities, skilled workers, strong and stable ouput market

In spite of its sustainable development and operation over years, the company has still encountered with many difficulties and challenges How to take advantage of resources such as location, finance, human resources and the market opportunities as Well as limit the weakness and avoid risks for the sustainable development It is

the main reason for the topic “Business Strategy for the period of 2011-2020 for Ba

Ria — Vung Tau Seafood Processing and Import Export Joint Stock Company

(BASEAFOOD)”

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CHAPTER 1

ARGUMENT BASIS AND PRACTICE

STRATEGIC DETERMINATION BY ENTERPRISE IN PROCESSING AND BUSINESS OF FISHERIES

1.1 DEFINITION, PROCESS OF PLANNING AND EXECUTING THE STRATEGIC

1.1.1 Definition

According to Fred R David, “Strategy are the means by which long term objectives will be achieved Business strategy may include geography expansion, diversification, acquisition, product development, market penetration, retrenchment, divestiture, liquidation, and joint venture”."”

1.1.2 Planning process and strategy implementation tố Strategic planning process includes three stages:

- Strategy establishment includes development of business, identification of

opportunities and threats from outside, identification of internal strengths and weaknesses, setup of long-term goals, creation of alternative strategies and select specific strategies to pursue

- Strategy implementation requires Company to establish annual goals, set

out policies, encourage staffs and allocate resources in order to propose strategies implemented Strategy implementation includes cultural development to support strategy that create an effective organization structure, redirect marketing activities, prepare budgets, develop and use

information systems and encourage individual activities

- Strategy assessment will monitor results of strategy establishment and

operations This step includes assessment and determination of individual and organization achievements and necessary adjustments

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1.1.3 Some matrixes are often used in making strategies a 1.1.3.1 The external factor evaluation EFE matrix

The external factor evaluation EFE matrix allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political,

govermental, legal, technological and competitive information Base on those, the

strategists can summarize the major oppotunities and threats of external environment that effect to the performance of the company After that, they indicate how

effectively a firm’s strategies have been response to key oppotunities and threats, and judge whether the external factors are oppotunities or threats for the company

I.I.3.2 The internal factor evaluation IFE matrix

IFE matrix summarizes and evaluates the major strengths and weaknesses in the functional areas of a business It also provides a basis for identifying and evaluating relationships among these areas Therefore, it helps the company to take

advantage and improve the strengths as well as to find methods to minimize the

weaknesses

1.1.3.3 The competitive profile matrix CPM

The competitive profile matrix identifies rating to compare the firm with its

major competitors in their sector and their particular strengths and weaknesses; this comparison is based on factors that affect the competitiveness of the firms in their sector Base on that, the manager can see the firm’s strengths and weaknesses compared with competitors, identifies competitive advantages and the weaknesses

needed to overcome of the company

1.1.3.4 SWOT matrix

SWOT matrix — Strengths — Weaknesses — Opportunities — Threats — provides an important matching tool for a company or a business plan It can helps the company consider all the oppotunities that can be take advantage Beides, it helps to

manage and cancel the threats that the company has not acknowledged yet Morever,

by using the basis of SWOT comparation and analysis between the company and its

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competitors, the firm can outline its distinctive strategy to competitors This stategy

Strategic Management

can helps the company competitive effectively in the market

Chart 1.1: SWOT Matrix

Strengths —S Weaknesses — W

: 1 L

SWOT Matrix 2 List strengths 2, List weaknesses

3 3;

4 4

Opportunities —O SO strategies WO strategies

1 1 1

2 List Opportunities 2 Use strengths to take 2: Pass weaknesses by

3 3 advantage of 3: taking advantage of

4 4 0ppotunities 4 oppotunities

Threats — T SO strategies WT strategies

I 1 1

2 List threats 2 Use strengths to 2 Minimize weaknesses

3 3 avoid threats 3 and avoid threats

4 4 4

S: Strengths: cac mat manh T: Threats: các nguy cơ O©: Opportunities: các cơ hội W: Weaknesses: các mặt yếu

{(1), (2), (3): Fred R David, Translator group: Truong Cong Minh, Trần Tuấn Thạc, Trần Thị Tường Như (2006), Concepls oƒ Strategic Managememt, Statistical Publishing House, Hanoi, Vietnam)

1.2 THE MODEL OF FIVE COMPETITIVE FORCES BY MICHEAL

E.PORTER®

According to Micheal Porter, a top strategist of the world in making strategic

and competition, the competitive leverage of any production sector is impacted by 5

following forces:

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Chart 1.2: Pattern of 5 competitive forces by Michael E Porter

Threats from competitors

= _—

Bargain ability of Competition of current Bargain ability of

suppliers competitors customers

Threat form alternative products and services

1.2.1 The power of the supplier is presented by the following points

Concentration ratio of suppliers; the importance leverage of the amount of

products to the suppliers; The differentiation of the suppliers; Impact of inputs on cost or differentiation; Supplier switching costs relative to firrm switching cost; The existance of substitute suppliers; The threat of increasing incorporation of suppliers; The supplying costs compares with total income of the sector

1.2.2 The threat of substitute represented by

The switching costs in using products; the trend of using substitute products

of the customers, the correlation of price and quality of substitute products 1.2.3 Potential competitors

According to M.Porter, the potential competitors are companies who has not appeared in the sector yet but might effect the sector in the future How many potential competitors they are, how strongly they effect to the sector, it depends on the following factors:

- The attractiveness of the sector: This factor is presented by some targets

such as benefitial ratio, the amount of customers, the amount of companies in the sector

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- The barriers to entry, presented by factors: Absolute cost advantage: The knowledge of the cycle of fluctuation of the market; The capacity of accessing input factors; The goverment’s policies; Economy to scale, Capital requirements; The features of the brand name; Switching costs, Access to distribution channels; The posibility of being revenged; Proprietary products

1.2.4 The power of customers is presented by

Bargaining leverage; Buyer volume; Buyer information availability; The features of brand name; Buyer price sensitivity; Differential advantage of industry products; Buyer concentration in the sector; Availability of existing substitute products; Buyer motivation

1.2.5 The intensity of competitive rivalry is presented by

The existence of barriers to exit; The concentration ratio of the sector; fixed

cost/ added value; The situation of sector’s growth; The situation of productivity

redundancy; Product differentiation; switching costs; The features of brand name;

The diversification of competitors; The selection in the sector

{(4) http://ngcenter.wordpress.com/2008/04/22/mo-hinh-5-ap-luc-canh-tranh-michael-

porter}

1.3 QSPM MATRIX AND STRATEGY CHOICE

QSPM Matrix (Quantitative Strategic Planning Matrix - QSPM) uses the input data from SWOT, EFE and IFE analysis The process of setting up an enterprise’s QSPM matrix includes 6 steps (see the table below):

- List the large opportunities/threats from external environment and _ the important strengths /weaknesses into the columm (1) of matrix These factors are taken directlly from EFE va IFE matrix

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- In column (2) of the matrix, fill numbers, which are corresponding to each

element in the classified column of EFE and IFE matrixes

- Study the SWOT matrix and identify the alternative strategies which the organization should consider to perform or record the strategies on the top row of QSPM matrix The strategies are classified into separate groups (if any)

- Determine the attractive mark (column A): Not attractive (= 1), Less attractive

(= 2), Quite attractive (= 3), Very attractive (= 4) These values show the

relative attractiveness of each strategy compared with other strategies in the same alternative strategy group

- Calculate the total attractive mark of each strategy, separately consider important success factors listed in column (1) by multiplying the classified number with the attractive mark in each row (writing in column B)

- Adding all the attractive marks gives us the total attractive mark of each

strategy (considering all the outside and inside appropriate factors that can affect the strategic decisions) The higher this total mark is, the more

appropriate and more worthy of being chose the strategy is

QSPM Matrix Chosen strategies

Crucial factors ene Basis of

Strategy 1 | Strategy 2 | Strategy 3 attractive

marks (1) (2) A B A B A B Internal factors 1 2 External factors 1 2 Total y " yr

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In principle, one QSPM matrix may include any number of group of alternative strategies and one certain group may include any amount of strategies, but only strategies in the same group can be assessed together For example, one diversifying strategy group may include strategies of concentric diversification, aggregate diversification while another strategy group may include strategies combining in vertical (forwards or rearwards) and combining in horizontal These

strategy groups are different and QSPM matrix only assesses strategies in same group

QSPM matrix shows the relative attraction of strategies, it can choose and more importantly, it can provide the objective basis in order to consider and decide to choose the most suitable product strategy However, QSPM matrix also has many limitations and it needs certain conditions to be used in reality One of the biggest limitations is that: the matrix establishment process requires intuitive judgment to give attractive marks— although it has based on information of environmental analysis that was conducted before Therefore, in order to use QSPM matrix

effectively, strategists need to carefully discuss and agree on each number in matrix

by giving additional marking basis in the column of basis of attractive marks

1.4 BUSINESS, PROCESSING - IMPORT AND OF VIETNAM SEAFOOD DURING INTEGRATION AND GLOBALIZATION

1.4.1 Fisheries contribute to GDP, foreign currency source/ competitiveness and advantages of Vietnam

Vietnam fisheries play an important role in national economic development

Scale of this sector expands and its role grows increasingly Since 2008, import turnover had reached more than $ 4 billion per year and always was one of five

major export sectors of Vietnam

Industry's annual GDP accounts for 3% of national GDP and for agricultural

sector only, GDP of fisheries sector is up to 35% In addition, the fisheries sector has

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created jobs for more than 4 million workers and contributed to maritime security for our nation

Strategy to develop fisheries sector by 2020 is that GDP will increase from 8

to 10% per year and export turnover will reach U.S $ 8-9 billion per year

1.4.2 Some issues need to solve in Vietnam's fisheries sector 1.4.2.1 Deal with dumping lawsuit

Dumping is to sell a product in any market with price lower than production

cost in order to defeat opponent, dominate market or get emergency foreign currency, sometimes due to political goals

By December 2010, Vietnam enterprises have coped with 43 anti - dumping

lawsuits, ranked seventh in 100 countries that was sued most Unfortunately,

proportion of businesses failing in a suit is 65% (According to Prof Dr Vo Thanh Thu —member of international arbitral committee in VCCI)

According to VCCI, 74% enterprises do not have law sections, 52%

organizations lack personnel with both legal ability and anti-dumping consultant

Seafood exports of Vietnam have experienced two great dumping cases affecting production and export of Vietnam seafood including dumping of frozen

fillet catfish and basa into the United States on 28" June, 2002 which CFA sued to

USITC and shrimp dumping case in U.S market on I“ January, 2004 which SSA

sued to DOC

Vietnam enterprises seem to win in these cases but they get very big damage

For years, VASEP and seafood exporters relating to two cases wasted a lot of

expenses and time to pursue such as expense for U.S attorney to protect Vietnam exporter’s interests; expense for travel to sue, expense for administration and expense for lack of knowledge of law in process country

Since most of the fish processing enterprises in Vietnam are small and

medium, if they involve cases of dumping with foreign enterprises, they themselves cannot pursue them Therefore, to reduce the damage, they themselves have law

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department and Association of Vietnam seafood processors should have the same In addition, Government also needs to have action program to help enterprises increase transparency, to understand law and process to pursue the case

1.4.2.2 Deal with the technical barriers

Every market or market sector usually has a few different rules on technical

barriers to export Russian and European market are two typical examples

For Russian market: even though processing companies have EU code, managed by HACCP, ISO, they shall not be accepted until Russian VPSS comes to each enterprise in Vietnam to test in accordance with requirements of the import importers into Russia If they have this certificate, they can export to Russia This has caused many difficulties for Vietnam seafood exporters to this market since

2008

For the European market: Regulation 1005/2008 by European Commission (EC) on certificate of fishing products origin (IMegal, unreported and unregulated fishing - IUU) became into effective (on 1“ January 2010) and had a great influence on Vietnam's exports to this market The main cause is fishing boats in Vietnam is

small, captain and crews have low level, lack knowledge of law, work in usual

practice, so they were "very scared" to record or sign on such documents Vietnam Association of Seafood Exporters and Processing (VASEP) said that there were at least 12 information need to fill in Certificate of exploitation (name of ship, name of vessel, registration number of ship, exploitation license, exploited seafood description, etc.) The written commitment for processing plants also requires

number of exploitation certificate, fishing ship name, fishing activity description,

volume of exploitation and processing, name and address of processing plants,

exporters, export Code and issuance date of hygiene certification In addition, the

administrative procedures for issuing these certificates by Vietnam agencies are very difficult and spend a lot of time, enterprises seems to shift to other markets

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1.4.2.3 Deal with use of chemical treatments and preservatives

It may confirm that currently Vietnam's major seafood processing enterprises know chemicals that allowed using and not allowed to use in processing of aquatic

products for each market For their own benefits and exporters, they have to follow

such requirements However, the threat comes from input by suppliers

Threat for enterprises processing products from cultivated material (Pangasius

catfish/basa, black tiger sugpo prawn, vannamei shrimp) is that during raising period, farmers use treatment drugs for shrimp and fish or other growth substances in food but they do not know or they know and they still use The reason is that after harvesting and selling raw materials to processing plans, they are no longer responsible for anything To solve this problem, two solutions can be taken Firstly, enterprises shall cultivate by themselves to control cultivation process from breeding period to harvesting Secondly, the State must have “strong policy” to treat seafood planters who do not comply with GMP, SSOP and Global Gap

Threat for enterprises in processing materials on sea is that after catching,

preservation of materials on sea from hatching period to plant, enterprises cannot control If enterprises want to test quality of products, they shall spend lot of time

Therefore, enterprises often test by their own sense To solve such situation, fishermen should be educated and bear "harder" measures, for example if a ship was

found to use forbidden preservatives, it shall be forbid to go to the sea in certain

time

1.5 NECESSITY OF STRATEGY PLANNING FOR BA RIA —VUNG TAU SEAFOOD PROCESSING AND IMPORT EXPORT JOINT STOCK COMPANY (BASEAFOOD)

Ba Ria — Vung Tau Seafood Processing-and Import Export JSC (Baseafood) is considered the leading company in province's fish processing industry thanks to great advantages, because this company was established earliest with modern

facilities, skilled workers as well as strong and stable output market

€3 Global Advanced Master of Business Administration

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However, in front of such great opportunities and challenges at present, though the company has existed and sustainably developed for many years, it still encountered many difficulties and challenges How to take advantage of such

resources as location, finance, human resources and opportunities from market as

well as to limit weaknesses, to avoid threats and can get sustainable

development.That is the main reason to select the topic "The Business Strategy of of

Ba Ria — Vung Tau Seafood Processing and Import Export Joint Stock Company in the period 2011-2020

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|

CHAPTER 2

CURRENT SITUATION ON STRATEGY MANAGEMENT AT BA RIA -VUNG TAU SEAFOOD PROCESSING - EXPORT AND IMPORT JOINT STOCK COMPANY

IN PERIOD 2008-2010

2.1 OVERVIEW OF BA RIA ~VUNG TAU SEAFOOD PROCESSING - EXPORT AND IMPORT JSC

2.1.1 Formation and development of Ba Ria — Vung Tau Seafood processing-

export and import company

Since 1992-2004, this is a state enterprise that was established under Decision

02/QD-UB on 8th October 1992 by Ba Ria — Vung Tau People’s Committee with the

name of Ba Ria — Vung Tau Seafood processing-export and import company

(BASEAFOOD)

To September 2004, Company was privatized and renamed as Ba Ria — Vung Tau Seafood processing-export and import JSC

After 7 years of operation under the new model, Company has had great

development, production development, market expansion, and workers’ income is

significantly improved

Company Name: BA RIA -VUNG TAU SEAFOOD PROCESSING — EXPORT AND IMPORT JSC

Trade Name: BaRia - VungTau Seafood Processing& Import Export Joint

Stock Company (BASEAFOOD)

Address: 460 Truong Cong Dinh, Ward 8, Vung Tau City, Ba Ria — Vung Tau Province

Tel: 0643.837043 Fax: 0643.383312

Email: bsfhcm@hcm.vnn.vn / Website: www baseafood.vn

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Major sector, products of production and business: Cultivation and import-export of agriculture, forest and aquatic products

Quality management standards: ISO 9001-2000, HACCP, HALAL, EU code

Main export markets: Europe, Asia, North America, Middle East The units: there are six enterprises, one workshop and one branch: - Frozen Seafood Processing Enterprise for Export I (F34)

- Frozen Seafood Processing Enterprise for Export [IT (F20)

- Frozen Seafood Processing Enterprise for Export II - Frozen Seafood Processing Enterprise for Export IV - Frozen Seafood Processing Enterprise for Export V - Sales and Service Enterprise

- Branch in Ho Chi Minh City

- Loc An Aquatic product processing workshop Forms of business ownership:

In the early years of equitization, Company’s charter capital is 32 billion, of

which State’s capital accounts for 25.74% and other shareholders 74.26%

In subsequent years, together with its willing, Company has strongly increased its charter capital to 40 billion with 25.74% of State and 74.26% of other

shareholders

2.1.2 Role and position of Company in the fisheries sector of Ba Ria — Vung Tau Ba Ria - Vung Tau Province is a Southeast province, bordering Dong Nai in the North, Ho Chi Minh City in the West, Binh Thuan province in the East and East

Sea in the South

This is very special location, as gateway to East Sea of provinces in Southeastern region This position enable Ba Ria - Vung Tau to gather potentialities

for sea economic development such as exploitation of oil and gas, sea ports and shipping, exploitation and processing of seafood, and resort tourist development, etc

In this position, Ba Ria-Vung Tau has all conditions for development of roads,

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airway, waterways and railways and as a transshipment location to other location at home and abroad

Fishery in Ba Ria — Vung Tau has formed and developed early thanks to natural advantages Gradually, it formed exploitation and cultivation sectors and especially strong growth of aquatic product processing industry Currently, there are more than three small and medium aquatic product-processing companies in Ba Ria — Vung Tau Each year, seafood export turnover reaches $ 245 million

BASEAFOOD is an enterprise processing and export of aquatic product which was first established in Ba Ria — Vung Tau with relatively large scale and as

one of three leading enterprises of export turnover in the province creating jobs for workers and also as the leading enterprise who innovated its technology contributing to industrialization -modernization of Ba Ria - Vung Tau

2.1.3 Overview of financial situation of Company in 2007 — 2010 2.1.3.1 Business report

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Through Business Report of Company from 2007 to 2010, we can see some following points:

Total revenue and income of Company sharply fluctuated in 2009, achieving only 55.35% compared with 2008, from $521 billion in 2008 dropped to 288 billion in 2009 The reason is that global economic crisis in 2008 — 2009 has

affected Vietnam economy in general and import-export enterprises of

agriculture, forest and aquatic products including Baseafood in particular,

revenues in 2009 were down almost 50% compared with 2008 However, in

2010, thanks to recovery of world economy, company's revenue growth gradually recovered Though it did not equal to 2007-2008, equivalent to

133.44% in 2009

The total cost of Company also reduced correspondingly compared with its

growth rate over the years Proportion of the total cost per total revenue and earnings over years 2007 — 2010 is 97% in average, in which prime cost of product accounts for the highest proportion - 85% in average (this is a common feature of exporters, prime cost often accounts for high proportion

compared to total revenues, mainly raw materials or finished products which

are manufactured, processed for export), secondly, expense for sales accounts for about 8% and the rest are for other expenses

Business income tax deferred revenue accounts for 3% in average in total

revenue and income

2.1.3.2 Balance sheet

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Analyze Balance Sheet in 31“ December in the period 2007- 2010, we can draw the following conclusions:

Total assets of Company in 2008 reached only 80% compared with 2007 —

down 20%, equivalent to such proportion, asset value of VND 104 billion in

31°' December 2007 decreased by VND 84 billion in 31 December 2008, down VND 20 billion Consider detailed structure of Company's total assets,

we can see the reason for reduction:

Short-term assets in 2008 decreased by almost 40% compared to 2007,

equivalent to such proportion, asset value of VND 76.6 billion in 31"

December 2007 decreased by VND 47 billion in 31“ December 2008, in which the short-term receivables and inventory were significantly reduced

Company has promoted recovery of debts, shortened time and limit of liabilities for customers and Company reduced rate of inventory reserves Long-term assets in 2008 increased 34% compared to 2007, equivalent to such proportion, asset value of VND 27.6 billion in 31 December 2007 increased to VND 37 billion at 31° December 2008 which mainly due to increase of fixed assets Company has invested more in equipment, technological lines for production In 2008, Company has focused on

investment and renewal of fixed assets and total fixed asset value reached

the higher level than ever its establishment However, in 2009, due to

global economic crisis, Company has reduced investment in new machinery, technology and equipment but put efficiency from the use of fixed assets as premium factor in cost reduction Also in this year,

Company researched, designed processing equipment in much more advanced line than processing in stainless table contributing to save costs

from late 2009 to 2010 but still improve quality

Total assets of Company are growing over the years 2008 — 2010 with asset

values as VND 84 billion at 31° December 2008 up to VND 98.9 billion in 31°" December 2009 which mainly due to increase of short-term assets and

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recrease of long-term assets (fixed asset depreciation has been invested in the previous years)

Total assets of Company are formed from two sources including liabilities and equity In 2008, total capital of Company fell nearly 20% compared to 2007, in which equity remained (VND 51.7 billion in 2007 and VND 52.4

billion in 2008) Total capital reduction is mainly due to Company decreased

liability, especially short-term liabilities of VND 44 billion in 2007 to VND 21.6 billion in 2008 (down nearly 50%)

The total capital of Company steadily increased over the years 2008 — 2010 Of which, in 2009, Company increased chapter capital (equity) from VND 32

billion to VND 40 billion The company decided to issue bonus shares with

proportion 4:1 (Shareholders holding 4 shares shall be rewarded 1 share) Sources of capital for bonus shares issuance is from equity surplus stock and

some from other sources

Table 2.3: Some basic financial norms

Current liquidity rate Time 2.19 2.22 2.17 1.74

Quick liquidity rate Time 1.02 1.42 1.02 0.99

2 | Financial leverage rate

Debt-to-equity ratio % 66.88% 53.86% 60.09% | 101.51%

Debt-to-total asset ratio % 40.08% 35.01% | 37.53% 50.37%

Equity-to-total asset ratio % 59.92% 64.99% 62.47% 49.63%

3 | Interest acquit rate

% 14.49 15.95 4.11 7.06

4 | Activity effectiveness ratio

Average collection period day 19.29 20.00 15.70 14.14

Days of Inventory turnover day 32.24 32.64 23.08 15.55

Total asset turnover circle 4.03 3.25 5.39 8.09

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5 | Profitability ratio J]

Gross interest ratio % 13.29% 12.88% 11.07% 9.72%

Net interest ratio % 2.68% 3.44% 2.87% 2.63%

Revenue-over-asset ratio (ROA) % 10.20% 10.97% 17.30% 10.65%

Revenue-over-equity ratio (ROE) % 25.23% 24.10% 45.47% 34.69%

2.1.3.3 Solvency of Company

Current liquidity ratio of Company is always greater than one, especially from

2008 to 2010, this ratio is always greater than two This is a good sign of financial activities; it shows that company can pay short-term debts

Besides, quick liquidity ratio in the years 2008 — 2009 is greater than | It expresses that Company can quickly pay short-term debts However, by 2010, the ratio seems to decline; it shows inventories account for high proportion in asset structure of Company

2.1.3.4 Financial leverage ratio

Debt-to-cquity ratio over the years 2008 - 2010 with an average of around 60%, level of debt used by companies is low Company always keeps the proportion

of liabilities at safe level and not let it exceeding equity Company’s financial ability is high

Total assets of the company are formed from the two sources including liabilities and equity In 2010, the debt-to-total asset ratio is 40.08%, capital-to-total

asset ratio is 59.92% This shows that in sponsored 100 dong of Company’s asset

value, debt accounts for 40 dong and equity 60 dong This is quite safe for Company,

liabilities must be guaranteed

2.1.3.5 Execution effectiveness ratio

The average collection period of Company over years is always less than 20

days This proves that ability to recover Company’s liabilities is good; Company can

control credit limits for customers and liability rate Company’s capital use

effectiveness is high

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Days for inventory turnover are 32 days Inventory time is high As a company exporting aquatic products, Company always keep a big volume of inventory for export This causes backlog of huge capital in inventory

Company’s total assets turnover in 2010 was 4:03 This means that | dong of Company’s asset value generates 4 dong of revenue This proves high effectiveness in asset use

2.1.3.6 Profitability ratio

Company’s profitability ratio in 2008 was high including use of equity (ROA

=17.30%, ROE = 45.47%) However, in 2009, profitability ratio reduced It means

that Company’s profitability also decreases It is caused by world financial crisis that makes Company’s partners meet difficulty and decrease their order leading market share contraction and revenue decrease compared with previous year and cause bad effect to Company’s profitability However, ROE in 2009 — 2010 is still higher than mobilized interest rate and bank deposit ensuring ability of bank interest payment

and dividends to their owners

2.2 CURRENT SITUATION OF PRODUCTION AND BUSINESS BY COMPANY IN PERIOD 2008 — 2010

2.2.1 Analyze key export markets of Company

As a strong company strong in the sector of processing and export of aquatic

products in Ba Ria— VungTau, its export market is very large Its products have

been present on many markets like U.S., Europe, particularly Eastern European countries such as Russia, Ukraine, Belarus, and Asian countries like Japan, Korea,

China, Singapore, Taiwan and African countries like Egypt and Tuynidi

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Table 2.4 : Export turnover report in the period of 2008 - 2010

Turnover in 2008 Turnover in 2009 Turnover in 2010 `

ITEMS

(USD) (USD) (USD)

A Total export turnover 28,423,693.93 14,460,841 32 17,371,024.75

B Asian market 14,804,452.44 10,481,182.58 10,492,476.07

C European market 12,777,828.25 3,696,341.53 6,313,731.75

D American market 305,325.00 173,626.01 453,298.63

E Other markets 536,088.24 109,691.20

(Source: Marketing Statement 2008 — 2010 of Baseafood) Table 2.5 : Export output report in the period of 2008 — 2010

FFEMIS Output in 2008 Output in 2009 Output in 2010

(Ton) (Ton) (Ton)

A Total export output 10,103 ,483.85 5,971,119.50 6,787,084.13

B Asian market 6,648, 946.85 4,660,459.80 4,791,137.35

c European market 3,239,147.00 1,199,849.10 1,865,267.60

d American market 56,000.00 55,930.60 74,604.18

| & Other markets 159,390.00 54,880.00 56,075.00

(Source: Marketing Statement 2008 2010 of Baseafood)

2.2.1.1 Asia Market Analysis

For Baseafood in current time, Asian market is the main market, accounting

for more than 60% in output and over 50% in turnover This is due to Baseafood company has been familiar with this market, especially Japan, Korea and Taiwan In

addition, technical barrier of these markets is not too strict; Baseafood took

advantage of its brand for business It means it will repurchase products from other manufacturers to export

Asian market is also a large market with great capacity, with consumption

habit of marine products and population scale accounting for nearly 60% of global

population

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2.2.1.2 European Market Analysis

Total EU market capacity reached 10.2 million tons (2006) accounting for 10.2% in total world seafood consumption the and ranking second after China, even bigger than Japan and the U.S Five leading consumers in EU market as Spain, France, Italy, Germany and UK accounting for 70% of EU total consumption in

2006 Per capita consumption is up to 21 kg/person/ year

Consumption of fishery products varies among EU members Highest aquatic

consumption per capita output is in Portugal (46kg), Spain (44kg) and Ireland

(28kg) Per capita consumption in UK, Germany and Italy is only in average level in EU, but these countries have large population, they are still big market In general, Mediterranean and Northern European countries consume many fish and shellfish species

Central European countries and new EU members (usually countries without sea such as Belarus, Romany, and Bulgary, Latvia) often do not eat seafood but fresh-water aquatic products However, Ukraine, Russia, Belarus is also big market

Consumption habits of these countries are changing rapidly and become a great

opportunity for Vietnam enterprises

EU consumption is constantly increasing However, in recent years, growth rate has decreased It may be caused by instability of global economy causing decrease of people's incomes in some countries and that make decrease of consumption According to FAO, total consumption in EU countries will increase

not much but the value will increase much as price of aquatic products will increase

and many seafood products with high added value will be consumed European consumers also tend to reduce consumption of frozen and replace by fresh fish,

frozen fish and other handy and value-added products

We can see that EU market tends to consume seafoods that is healthy, convenient and suitable with consumer’s taste Many seafood products have successfully imported in Europe thanks to companies followed consumption trends and thus approach a large number of consumers Aquatic products are produced

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sustainably with clear origins and adhered to the provisions by the Global Gap are used reliably in Europe

For Baseafood Company, it has exported about 1,300 tones of products — accounting for about 14.2% in export proportion of Company in 2008 In 2009, its export increased by 15.2% because it have some more markets (Belgium, Croatia,

etc.) In early 2010, when regulation TUU on fishing became effective, export also

faces some obstacles Accordingly, each export shipment of fishery products shall be attached by a commitment of processing plant on product origin, or exploitation certificate in case the whole exploited fishery production is processed into products in export lot of goods or a duplicate certificate in case a part of exploited fishery production is processed into products for export Under these circumstances, in 2010 Company exported only about 1.100 tons of products However, this reduction is not much

In summary: EU market share is only about 15% of total turnover of

Baseafood It shows that this may not be the main market Baseafood It can be

caused by reasons such as profit ratio here is lower than other markets of Company, trade barriers makes difficulty for its production or Company has no big partners in this market

2.2.1.3 U.S market analysis

Now and probably for many decades, United States remains the largest economy in the world US’s GDP is about USD 12.5 trillion, accounting for about 28% in world GDP (If calculated in accordance with PPP, US’s GDP accounted for 20% in world GDP) Its per capita income has always been in world leading top with

about USD 42,000 / person / year

Before 2004, the United States had always been an exporter of agricultural and fishery products and food, but since 2004, it has always been an importer of such

commodities In recent years, import of agriculture and fishery products has

tended to increase because market demand for the value added commodities and labor consumption is high, United States has no advantage In addition, sea transport

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system of world has significant development leading decrease of transportation cost It is also a factor affecting the price and time from the exporter to final customers

Aquatic product is one with the largest import turnover Its turnover only was more than USD 11.2 billion (in 2004), accounting for 17% of total import turnover of agricultural products and foodstuffs Increase of seafood import maintains because aquatic products are considered healthy foods rather than animal products

Vietnam has exported some seafood products to U.S such as frozen shrimp,

fillet catfish /basa, processed tuna, crab meat and some other items

Baseafood has exported to U.S market not much products However, this

trend is increasing In particular, Baseafood has exported to this market dried fish and dried cuttle These are favorite products of Asian community in the United

States Although export output is not much and tends to increase in both volume and turnover but it brings higher profit ratio than other markets

2.2.2 Company’s key export products analy

Table 2.6: Report of Company key export products in the period 2008 - 2010

MAIN 2008 2009 2010

PRODUCTS (KG) (USD) (KG) (USD) (KG) (USD)

Surimi 5,050,669 | 9,732,409 | 2,359,093 | 2,631,115] 3,272,560| 4,544,184

Frozen sea fish | 1,688,832 | 3,464,279 844,521 | 2,761,755 510,002 | 1,774,064

Cuttle, octopus 1,967,088 6,543,828 1,281,637 | 4,535,323 1,237,315 4,432,115

1,194,370 7,558,453 624,796 2,883,435 824.545 4.398.875

cuttle

Other seafood 202,525 1,124,725 861,073 1,649,214 942,663 2 221,786

Total

(Source: Marketing Statement 2008 — 2010 of Baseafood)

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- Surimi accounts for about 40-50% in output and 25-30% in export turnover of

Company This shows that Baseafood has good market

- Frozen sea fishes tend to decline fast because material resource is increasingly exhausted and output of sea fish exploitation for export decreased

2.2.3 Company key production product analysis

Table 2.7: Report of Company’s key product for export in the period of 2008 — 2010 Calculated unit: Kg MAIN EXPORT ee 2008 2009 2010 Surimi 1,907,959 870,637 879,980

Frozen sea fish 1,921,721 744,851 308,215

Cuttle, octopus 2,195,610 1,256,539 1,423,938

Dried fish and cuttle 1,096,464 555264 564,127

Other seafood 135,827 213,910 170,225

Total 7,257,581 3,641,201 3,346,485

(Source: Marketing Statement 2008 — 2010 of Baseafood) Table 2.8: Analysis on rate of product output in Company per total export output

in the period of 2008 — 2010

MAIN EXPORT % production / % production / % production /

PRODUCTS export in 2008 export in 2009 export in 2010

Surimi 37.78 36.91 26.89

Frozen sea fish 113.79 88.20 60.43

Cuttle, octopus 111.62 98.04 115.08 Dried fish and cuttle 91.80 88.87 68.42

| Other seafood 67.07 24.84 18.06

Total

(Source: Marketing Statement 2008 — 2010 of Baseafood)

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From this analysis, we can draw the following conclusions:

Proportion of goods manufactured at Company in total goods for export has decreased over years Especially in 2010, structure of goods manufactured in Company with total goods for export accounts for less than 50% It shows that Company has better output market than its capacity Therefore, it is necessary to maintain export market in one hand, and to promote production in other hand, including utilization of production capacity of related plants and expansion of

production scale to make use of economic advantage in accordance with scale

and market capacity of enterprise

The rate between output of produced surimi and output of surimi for export tends to decrease This shows that surimi plant has not operated at its full capacity It makes increase of fixed cost per a ton of product and decrease of guarantee cost balance affecting to production effectiveness of this factory

The rate of frozen squid and octopus output produced in 2010 is over 100% It

proves a large quantity of goods was sold in domestic market So, company

should search more export markets for such commodities 2.2.4 Analysis of Input material market

Table 2.9: Report of material procurement in the period of 2008 — 2010

Material for production of frozen fish 7,912,431 548,622 5,679,346

Material for production of Surimi 2,213,620 524,460 823,220

Material for production of octopus

alesis 2,847,792 1,500,163 2,301,932

Material for production of dried fish 895,509 548,622 521,443

Other materials 661,340 568,035 1,384,713

TOTAL

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Overall, Company’s materials procurement tends to decrease This suggests that Company need to take measures to strengthen procurement of raw materials for production

2.2.5 Analysis of Company’s human resource

Table 2.10: Professional skill of human resource

Post- Senior 1~3-level

and labour and Total

graduated college labour

college more

2010

Volume (people) 2 78 43 223 1,304 1,650

Proportion (%)

(Source: Human Resource Department — Salary of Baseafood) * According to experts, Company’s human resource with high qualification 1s

relatively suitable However, the problem is that such persons tend to work by

their experience They are not educated and update knowledge much to improve their professional knowledge, foreign languages and informatics Compared with other units in this sector in Ba Ria- Vung Tau, this force is strong but it is

necessary to improve their capacity and level to catch up with development in our

country and the region

= Company has not established complete and synchronized recruition process process This is big weak point that needs to be improved

" Lack of unskilled workers compared to Company’s production demand This has

limited capacity exploitation of plants

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2.2.6 TFE Internal factor evaluation matrix of the company

No Internal factors Weight |Rating} Weighted ranging scores l Chairman and board of directors have 0.07 2 0.14

good professional skill, experienced management for seafood processing

2 | The professional skills of staff and 0.08 2 0.16 middle-management are still limited

3 | Strong trade mark in the international 0.06 | 0.06

market

4 | Strong finance 0.15 0.45

5 | Modern production technology 0.09 4 0.36

6 | Employees with quality, skills and high 0.08 3 0.24 experience; good encourage policy for

studying to improve professional skill

and spirit

7 | Intensity of product promotion 0.06 2 0.12 8 | Relative completed quality management 0.05 Z 0.10 9 | Adaptability with changes 0.08 4 0.32 10 | Research and develop ineffective 0.07 2 0.14

products

11 | The sense of initiative about raw 0.14 1 0.14

material resource

12 | The relationship between the 0.07 2 0.14

departments with the units not closely

Total 1.00 2.37

Rating evaluation: 1 = major weakness, 2 = minor weakness, 3 = minor strength, 4

= major strength

Comments:

The total of weighted scores is 2,37 means the internal environment of Baseafood Company is good according to the following important points:

Strengths:

- Strong finance, good liquidation

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- Modern production technology

- Employees with management degree, skills and be font of the Company in

many years

- Good export market - Diversified products

- Adaptability with the changes Weaknesses:

- The sense of initiative about raw material resource is indicated as one of the weakness points

- The level of product promotion and trade mark building to reach the

international market has limitations

2.3 ANALYSE THE INFLUENCE OF EXTERNAL FACTORS ON

ACTIVITIES OF BASEAFOOD COMPANY

2.3.1 Comprehensive environment 2.3.1.7 Economic factor

Viet Nam’s economy has gained a high growth-rate, and the people’s material and spiritual life has considerably been improved The government has increasingly created proper policies to encourage enterprises to operate actively, dynamically, creatively and self-control, hence to facilitate any their activities

Recently global economy has experienced a serious crisis, which has a big

impact on Vietnam economy Higher price, inflation, especially instability of

exchange rate had negative effects on production and business of enterprises Higher price of Vietnam’s exports than that of the world and less competitive comodities force consumers to buy substitute goods from other countries, as a result leading to

the enterprises’ loss of market share in field of exportation 2.3.1.2 Goverment and law factor

High political stability in Vietnam, compared with the foreign instability creates a big advantage for domestic enterprises The business environment in

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Vietnam: development incentive policies, administrative reform ; continual modification and supplementation of foreign investment law, environment law, fishery law, land law, enterprise law, value added tax law etc is being completed to be suitable with domestic business environment as well as regulations of international treaty

However, the current legislation system, especially environment law and mineral law still lacks specific regulations and instructions and seems to be unfeasible and impractical Cumbersome administrative formalities, overlapping regulations among documents along with unambiguous assignments causes limitations on the enterprises’ activities

2.3.1.3 Social factor

The fishery industry as a whole created jobs for about over 4 million labors However, The fishery processing enterprises are in serious shortage of labor due to labor shift from fishery to other industries such as textile garment, agricultural processing industry

2.3.1.4 Natural factors

From 2008 to 2010, typhoons, tropical low pressure, icy rain, flashing floods,

whirlwind at a lot of localities over the country brought about a big human and material damage In the fishery exploitation which was most severely damaged, some fishermen shifted to another job and input for fishery possessing industry was

affected because of seriously damaged boats

2.3.1.5 Technological factor

Rapid technical and technological developments in the field of fishery

exploitation and processing has significant contributions to improving production and quality of commodities sold out to market Therefore, in the context of

increasingly strong competition environment, comparative advantages belongs to the enterprises which know how to apply new technology to create new products and services satisfactory with diversified and changing demands of the customers